On going through this unit you should be able to describe:various aspects of the distribution system;different types of distribution and exchange of goods and services in various societies;

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andabout market exchange and its features.

14.1 INTRODUCTION

In this unit you will learn about the concepts of distribution. Various types of exchange arediscussed here. The idea of reciprocal exchange and the types of economic reciprocity arebrought out. Exchange based on redistribution, features ofthe market\exchange, and networksof services are all dealt with in this unit.

14.2 DISTRIBUTION

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If people kept their products for themselves, the social benefits of co-operation would be lost.tn every society the fruits of production are unevenly dispersed among people and in relation

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to time. To cope with this problem, every society manifests a system of distribution or a setof strategies for apportioning goods and services among the members of a community. Theallocation or exchange of goods and services within a local group or between different localgroups is known as distribution or a system of exchange. By far, the most common waypeople distribute goods and services is through economic exchange. It consists ofthe culturalrules for the transfer of goods and services that we need to survive and to live normal sociallives through exchange. The system of exchange is found in every economy, even the mostprimitive. There are six possible kinds of exchange according to the items exchanged: goodsfor goods, services for services, goods for services, money for goods, money for services andmoney for money.The use of money occurs only in relatively advanced economies. Themost notable fact about exchange is that it requires a transaction between people. Exchangesystem provide the rules and the motivation for individuals to give one another materialgoods and to provide each other with services.

Ecomomic Processes

14.3

TYPES

OF

EXCHANGE SYSTEMS

Karl Polanyi, an economic historian, has identified three different modes of allocation orprinciples of exchange: reciprocity, redistribution and market exchange. What we shouldremember is that every economy is characterised by at least one of these systems of exchange.However, many economies are based on two or all three of these systems of exchange. Let usknow about each one of these systems one by one. Each mode embodies a particular systemof rules that makes it different from others and each gives the transfer of goods and servicesspecial meaning.

14.3.1

Reciprocal Exchange

This method refers to transfer of goods or services between two people or groups based on

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their role obligations. We visit our grandparents with presents during holidays, offer afriend a ride to school and so on. We behave according to rules defmed by reciprocal exchange,revolving around the notion of role obligation. The reason for their reciprocal exchange is

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not necessarily dictated by the desire for the material goods themselves as it is in the market.Certainly the mother and the son attempt to give each other items they know will beappreciated, but the reason for the exchange is their obligation to one another, an obligationthey assume when they take on the status of mother and son. If the son fails to give anythingto his mother, she will be hurt and disappointed. Similarly, a mother who did not give giftswould also have to face very disappointed children. For this reason, reciprocal exchangedoes not usually occur between strangers.

Resiprocal

Exchange

Furthq, reciprocal exchange is not dictated by maximisation which is the basic principleoperatingrin market exchange. When the mother gives her son some gift, she does notbother about what the son is going to give to her in return, nor will she give the set to theboy's sister (daughter) because the girl has a more valuable present for her. She simplymakes the exchange because it is a culturally defined obligation associated with her role as amother.

Distribution Processes

Activity

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Find out from close family members or friends about a marriage held recently which youattended; as family or friend; about the kinds of gift exchanges or services hired. Listout the kind of economic exchanges of goods and services that took place during themarriage according to its nature; eg. reciprocal exchange or market exchange, etc.Compare your list with other student's lists at your study centre.

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14.3.1.1 Value of Goods

The value of the goods given need not be the same, but there is a tendency for an equality ofvalue to characterise exchange between individuals of equal rank. As long as the value ofitems exchanged reciprocally is within the ran e of what is culturally defined as proper, theobligation of the parties to the exchange is m

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. Some forms of reciprocal exchange aredifficult to recognise because they seem one-sided. It is easy to see that Christmasgift-giving is reciprocal because the two parties to the exchange give present to each othersimultaneously. However, in many circumstances we may only witness a one-way exchange.For example, when a neighbour or a relative gives some money or an article as a gift to abridegroom on the occasion of his marriage, the groom does not immediately return somethingof value to the donor. He will wait until the marriage of his friend or a relative. Delayedreciprocity of this sort places the people in a network of outstanding debts. Thus, we haveseen two kinds of reciprocity:i) Generalised reciprocityIn which neither the value nor what is given is calculated nor the time ofrepayment specified.Such transactions do not involve economic or other self-interest. That means generalisedreciprocity is gift-giving without any immediate return or conscious thought of return.ii) Balanced reciprocityIn which goods and services of commensurate worth are traded within a finite period (directexchange). This sort of exchange is motivated by the desire or need for certain objects.Thus reciprocal exchange serves as the major mode of transfer for members of hunting andfood-gathering societies. For example, the animals caught or killed in the hunting by asolitary hunter are usually distributed among other members of the camp on the basis ofobligations associated with kinship.

14.3.2 Exchange Based on Redistribution

This system of exchange refers to the transfer of goods and services between a group of

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people and a central collecting source based on role obligation. Like reciprocity, redistributiveexchange occurs because people are obligated to each other. In other words, goods collectedor contributed from members of a group flow to some central point from which they are

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redistributed to the society. Redistribution may be voluntary on the part of members for asociety or it may be involuntary in that the collective centre uses agents to force the membersto contribute goods and services to the authorities the redistributive centre varies from the

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head of a band or tribe to the ruler of a kingdom. Redistribution is the process which isfound in all societies but it becomes an important mechanism of distribution only in societieswith a relatively complex system of political organisation and s substantial economic surplus.

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In all societies, there is some voluntary redistribution, at least within the family. Members ofthe family pool their labour or products or income for their common good. But redistributionexists in a majority of the hunting and fishing societies, in some horticultural societies, andin allnost all pastoral and agricultural societies which contain political machinery of onekind or the other to co-ordinate centralised collection and distribution.